Reference: (Board's Circular No. 333/ 49/97-CX. dated 10th September, '97)

I am directed to refer to the Board's Circular No. 333/49/97-CX dated 10.9.1997 wherein guidelines regarding classification of products under the Central Excise Tariff Act, 1985, which are claimed by the manufacturers as Ayurvedic medicines, were issued.

2.     A doubt arose on a question of law, as to how and on what basis a distinction between drugs and cosmetics, is to be made, when the assessee is holding a valid drug licence under the Drugs and Cosmetics Act, 1940 for a product which is sought to be classified under the Central Excise Tariff.

3.     The matter has been examined in Board's office in consultation with the Ministry of Law and Justice.

4.     The Ministry of Law & Justice have opined that.

"the objects of the Central Excise Tariff Act, 1985 and Drugs & Cosmetics Act, 1940 are different and the two Acts operate in separate and different fields. The Supreme Court, in Shri Baidyanath Ayurved Bhavan Limited Vs. Collector of Central Excise, Nagpur has pointed out that the primary object of the Excise Act is to raise revenue and for that purpose various products are differently classified. The court head that in interpreting a term under the Excise Act, resort should not be had to its scientific or technical meaning given under the Drugs and Cosmetics Act, 1940. Whether a product can be considered as drugs and cosmetics will have to be determined with reference to the objects of the Act under which the issue is to be decided".

5.     Board has accepted the aforesaid advice of the Ministry of Law.